Portfolio Crafter
10-18-2006, 04:40 AM
End of Day Market Summary Tuesday, 10/17/2006
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Stocks ended lower after the latest producer price report reignited inflation fears. However, Johnson & Johnson and Merrill Lynch both outperformed the broader market on the back of strong quarterly results. A report showing an improvement in builders' sentiment eased concern about the housing market and helped stocks bounce off their lows for the session. However, troubling economic news overshadowed positive earnings reports and lead to the decline.
Today, the Dow Jones Industrial average closed down 30.58 or 0.26% to 11,950.02, the broader S&P 500 index closed down 5.00 or 0.37% to 1,364.05, while the tech-fueled Nasdaq composite index closed down 18.89 or 0.8% to 2,344.95.
Market breadth was negative. On the New York Stock Exchange, losers beat winners more than 5 to 3 on volume of 1.52 billion shares. On the Nasdaq, decliners topped advancers 9 to 5 volume of 2.16 billion shares.
The market was a little nervous on reports that North Korea may carry out another nuclear test. Further confusion was created by the producer-price report and a confusing industrial production report. However, a positive builders' sentiment report was a helping factor that helped the market bounce off its lows.
The latest producer-price report reignited concerns about inflation. Core producer prices, which excludes food and energy costs, rose a surprising 0.6% in September, while economist were looking at a rise of only 0.2%. The investors were worried about the implications of the producer-price report for consumer prices. There was further bad news as the U.S. industrial sector slowed sharply in September, with the industrial production from factories, mines and utilities dropping 0.6%. Economists had been looking for a much smaller decline of 0.1%. However, the capacity utilization rate for the industrial sector fell to 81.9% from 82.5%, an indication of lessening inflationary pressures from potential bottlenecks.
Yahoo Inc. reported that third quarter profit fell 37%, as higher advertising sales at its collection of Internet sites weren't enough to offset stock options costs and higher expenses. Additionally, its board has authorized the company to repurchase up to $3 billion worth of its common stock over the next five years. Net Income for the quarter fell to $158.5 million, from $253.8 million last year. Net sales rose 20% to $1.12 billion, against the expected $1.14 billion.
Stock of United Tech closed down $1.47 to $65.32, despite reporting better than expected results. Its earnings rose 21% to $996 million, compared to $821 million last year. Revenue rose 11.5% to $12.16 billion from $10.91 billion. The company also lifted its earnings forecast for the year.
Shares of Merrill Lynch closed up 41 cents at $84.52, after it reported a more than double increase in net income due to a one-time net benefit of $1.1 billion from its merger with asset-management firm BlackRock. It reported an EPS of $3.17 against the expected $1.47. Excluding the benefits from merger, the company's third-quarter earnings rose 43%.
Shares of J&J closed up $1.12 to $66.05, after it posted forecast-beating third-quarter results, with performance spurred by solid growth in all three of its healthcare divisions. The company reported net income of $2.8 billion, compared with $2.5 billion last year. Revenue jumped 7.9% to $13.3 billion vs. $12.3 billion last year. This is against the expected growth of 7%.
Shares in the Chicago Mercantile Exchange closed up $13.25 or 2.6% to $516.50 after it reached an agreement to buy the Chicago Board of Trade for about $8 billion in stock and cash in a bid to win more of the booming market for derivatives. Chicago Board of Trade share rallied $17.48 or 13% to $151.99. This deal would combine the two largest futures exchanges in the United States.
Shares of Eli Lilly and Co. closed down 3% at $54.65, on news that it is buying Icos Corp. the maker of the erectile dysfunction drug Cialis for $2.1 billion in cash. Stock of Icos closed up 16% to $31.44. Additionally, Lilly reported second quarter earning of $822 million, against a loss of $252 million last year. Net sales rose to $3.87 billion from $3.67 billion.
U.S. light crude lost $1.01 to settle at $58.93 a barrel on the New York Mercantile Exchange. Prices fell on expectations that domestic supply data will show a rise in crude inventories for the latest week. Traders are also trying to second-guess the outcome of an OPEC emergency meeting to discuss ways to halt the recent slide in oil prices.
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Stocks ended lower after the latest producer price report reignited inflation fears. However, Johnson & Johnson and Merrill Lynch both outperformed the broader market on the back of strong quarterly results. A report showing an improvement in builders' sentiment eased concern about the housing market and helped stocks bounce off their lows for the session. However, troubling economic news overshadowed positive earnings reports and lead to the decline.
Today, the Dow Jones Industrial average closed down 30.58 or 0.26% to 11,950.02, the broader S&P 500 index closed down 5.00 or 0.37% to 1,364.05, while the tech-fueled Nasdaq composite index closed down 18.89 or 0.8% to 2,344.95.
Market breadth was negative. On the New York Stock Exchange, losers beat winners more than 5 to 3 on volume of 1.52 billion shares. On the Nasdaq, decliners topped advancers 9 to 5 volume of 2.16 billion shares.
The market was a little nervous on reports that North Korea may carry out another nuclear test. Further confusion was created by the producer-price report and a confusing industrial production report. However, a positive builders' sentiment report was a helping factor that helped the market bounce off its lows.
The latest producer-price report reignited concerns about inflation. Core producer prices, which excludes food and energy costs, rose a surprising 0.6% in September, while economist were looking at a rise of only 0.2%. The investors were worried about the implications of the producer-price report for consumer prices. There was further bad news as the U.S. industrial sector slowed sharply in September, with the industrial production from factories, mines and utilities dropping 0.6%. Economists had been looking for a much smaller decline of 0.1%. However, the capacity utilization rate for the industrial sector fell to 81.9% from 82.5%, an indication of lessening inflationary pressures from potential bottlenecks.
Yahoo Inc. reported that third quarter profit fell 37%, as higher advertising sales at its collection of Internet sites weren't enough to offset stock options costs and higher expenses. Additionally, its board has authorized the company to repurchase up to $3 billion worth of its common stock over the next five years. Net Income for the quarter fell to $158.5 million, from $253.8 million last year. Net sales rose 20% to $1.12 billion, against the expected $1.14 billion.
Stock of United Tech closed down $1.47 to $65.32, despite reporting better than expected results. Its earnings rose 21% to $996 million, compared to $821 million last year. Revenue rose 11.5% to $12.16 billion from $10.91 billion. The company also lifted its earnings forecast for the year.
Shares of Merrill Lynch closed up 41 cents at $84.52, after it reported a more than double increase in net income due to a one-time net benefit of $1.1 billion from its merger with asset-management firm BlackRock. It reported an EPS of $3.17 against the expected $1.47. Excluding the benefits from merger, the company's third-quarter earnings rose 43%.
Shares of J&J closed up $1.12 to $66.05, after it posted forecast-beating third-quarter results, with performance spurred by solid growth in all three of its healthcare divisions. The company reported net income of $2.8 billion, compared with $2.5 billion last year. Revenue jumped 7.9% to $13.3 billion vs. $12.3 billion last year. This is against the expected growth of 7%.
Shares in the Chicago Mercantile Exchange closed up $13.25 or 2.6% to $516.50 after it reached an agreement to buy the Chicago Board of Trade for about $8 billion in stock and cash in a bid to win more of the booming market for derivatives. Chicago Board of Trade share rallied $17.48 or 13% to $151.99. This deal would combine the two largest futures exchanges in the United States.
Shares of Eli Lilly and Co. closed down 3% at $54.65, on news that it is buying Icos Corp. the maker of the erectile dysfunction drug Cialis for $2.1 billion in cash. Stock of Icos closed up 16% to $31.44. Additionally, Lilly reported second quarter earning of $822 million, against a loss of $252 million last year. Net sales rose to $3.87 billion from $3.67 billion.
U.S. light crude lost $1.01 to settle at $58.93 a barrel on the New York Mercantile Exchange. Prices fell on expectations that domestic supply data will show a rise in crude inventories for the latest week. Traders are also trying to second-guess the outcome of an OPEC emergency meeting to discuss ways to halt the recent slide in oil prices.
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